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December 4, 2012

Bank of America Explores Social Impact Bonds, Report Says

Bonds pay to do good and can earn a profit for ‘investors’

BofA headquarters in Charlotte, N.C. (Photo: AP)

Bank of America may be about to take up a newly popular way to blend business and philanthropy.

The Charlotte Observer reported Friday that the bank had applied for a trademark on the phrase “Anything a Society Truly Wants Can Be Financed and Achieved,” which its applications said applied to social impact bonds or “project financing for socially beneficial programs.”

Social impact bonds, also called “pay for success” bonds, allow “investors” to put money toward a good cause and to earn a return if its goal is achieved.

BoA declined to provide information about its plans, the report said.

In August, New York City announced a social-impact bond program, financed by Goldman Sachs. Its goal is to reduce recidivism among youthful offenders at Rikers Island jail.

If this happens, Goldman can get its money back and stands to earn a profit, depending on the extent of the improvement.

Social impact bonds are relatively new on the charity scene. Britain rolled out a social impact bond two years ago to finance a program for 3,000 prisoners at Her Majesty’s Prison Peterborough, The New York Times reported in November.

Since then, the U.S. government and several states and municipalities around the country have looked into launching programs, most to address chronic problems such as homelessness and prison overpopulation. The Charlotte Observer reported that the White House earlier this year had said it would like the federal government to put $100 million toward these programs.